Settlement

At maturity, the contract autonomously settles the position against a 5-minute time-weighted average (TWAP) of the Pyth Network price feed, paying the difference between the settlement rate and the locked rate.

The payout

Settlement occurs as a final exchange of variation margin: the payout transfers between margin accounts, and the contract releases each side's initial margin.

payout = notional × (settlement rate − locked rate)

• Notional: the size of the forward, in the base currency.
• Locked rate: the rate both sides signed at binding.
• Settlement rate: a 5-minute time-weighted average (TWAP) of the Pyth feed.

Close-out

Close-out protects the continuity of trades when a participant fails to meet margin requirements. If a cure window expires unmet, or an account breaches the maintenance margin threshold, the account's full portfolio enters close-out.

Once close-out is triggered, each position in the portfolio goes to auction. The defaulter's remaining margin funds the auction incentives. When an auction succeeds, the position transfers to the winning participant with its terms intact. The non-defaulting participant remains unaffected.